Reebok International Ltd.

Group F09927813 BANE AVDHOOT ARVIND 09927851 SUDHANSHU SHEKHAR 09927880 SANJOE TOM JOSE 09927911 SANDEEP SINGH BHATIA 09927841 MANVENDRA GUPTA09927888 ARUN KUMAR SINGARAJ 09427704 PRABHAT PANI( PHD )

History Founded in England in 1895 as J.W.

Foster and Sons, a manufacturer of track shoes

Renamed Reebok in 1958 North American distribution rights

purchased by Paul Fireman in 1979 Fireman and a few investors bought the

parent company in 1984

Aggressive Growth First products Fireman imported to the U.S.

were three models of high-end running shoes 1982 – introduced The “Freestyle,”first shoe for

aerobics, and first athletic shoe targeted at women

Ushered in rapid growth for Reebok as running mania subsided

Firm ranked top among major U.S. firms in sales growth, earnings growth & return on equity

300 different shoes in 10 categories by 1988.

Reebok Net Sales

1983 1984 1985 1986 19870

200

400

600

800

1000

1200

Net Sales

Net Sales

Diversification At the same time, company began

diversifying into other products Aerobic shoes dropped in share of total

shoes produced from 56% to 29%

Market Share

Reebok; 32.20%

Nike; 18.60%

Adidas; 5.70%Aviva; 2.30%

Asics Tiger; 2.20%

Others; 30.90%

Converse; 8.10%

Reebok’s Success Ability to respond to consumers’ needs & desires High brand recognition • 1987 survey: 95% of athletic shoe owners

were aware of Reebok v. 57% two years prior Unaided awareness of Reebok doubled between

1985 and 1987 • Compared with a drop by Nike on the same

measure • 57% of teens dubbed Reebok the “in” shoe

(38% for Nike)

Strengths Market penetration – 52% had ever owned Reeboks (70% of the teens) – 45% were Reebok owners – higher than any other

brand (customer retention is easier than acquisition) High brand loyalty – 2 out of 3 consumers who last purchased Reebok

intended to make Reebok their next purchase – Reebok owners more likely to purchase athletic

shoes at regular price than non-owners

Strengths Access to retailers through its direct

distribution strategy– Add value by traveling the U.S. teaching retailers and consumers about the products’ features and benefits

Well equipped to handle future supply shortages (like the ones in 1987) by manufacturing in multiple countries

Weakness› Could not sustain its image as an

aspirational brand.

› Entire market study is primarily targetted in the US.

Consumer Buying Pattern

Information Source

Total Users Non Users

Friend or relative

72% 69% 74%

Coach or instructor

65 64 65

Salesperson 54 53 54Article in magazine

50 52 48

Advertisement 45 43 47

Reebok

Market Segments Weekend warriors – use their shoes for

sports but are not zealous athletes Casual wearers – use athletic shoes only

for street-wear–Largest segment: 80% of sales–Demand comfort and style

Serious athletes- Smallest segment, perceived by industry analysts to be opinion leaders for both of the other segments

Communications Programs • Category advertising– A variety of communications to promote specific product

lines “Reeboks let U.B.U.” umbrella advertising

– Stress freedom of expression and individuality to rekindle the vitality of the Reebok name while maintaining the brand’s mass appeal

Olympics advertising – Associate Reeboks with sports to excite brand dealers Energy Return System (ERS)

– Performance-based print campaign to reach active sports participants

1988 Business Environment Increasing costs of Far East production

puts pressure on margins Retailers narrow selections to fewer

brands Shorter athletic shoe product life cycles Competition intensifies in all

categories Shift in the way Reebok wearers talk

about their shoes

About Human Right Tour A world concert tour conceived by AI Aimed at developing Human Right

Awareness worldwide. Telephonic Survey of 1000 US nationals

ordered by Reebok to identify attitudes towards AI

The Human Rights Now! Tour

Objective is to reach young people with a positive message about Reebok

Nature of the event The most exciting event of the year Mass pre-event, event, and post-event

exposure expected 18 concerts in 16 countries on 5 continents Extensive advertising, promotions, and

public relations planned

Human Rights Now! TourNature of the event As the sole underwriter of the tour, the

risks are high $2M tour expenses + up to $8M tour deficit

+ $5M marketing = up to $15M / 1 Potential negative tour publicity

– AI has the final decision on most aspects of the tour– Net profits from tour merchandise donated to AI

Human Rights Now! TourNature of the event Reebok created a human rights department,

thought to be the first among CSR initiative in the private sector

Nike sales surpassed Reebok- need to do some thing different

Marketing communication is not about whether to communicate , its about what, when and how to say it and to whom and how often

President Jimmy Carter joins the Reebok Human Rights Board of Advisors

Benefits of Sponsorship Target Group for Reebok is geography

independent and same true of the event. Demographically and psychographically events covers the entire target group

Event offers sustained exposure to the brand as a social movement will remain in the minds of people who are a part of it for a long time

Will reinforce perceptions of key brand image association with freedom & youth

Enhance Corporate image as likeable company promoting social causes

Benefits of Sponsorship Huge number of people going to be

part of the event in different geographies in a very lively environment (music concert). The experiences created in an environment of youthfulness and dynamism will stay with them forever.

Opportunity to entertain key clients-Youth Association leaders etc

Merchandising opportunities

Measuring Sponsorship Benefits

Direct tracking of sponsorship related activities: web data, call center data, online event statistics

Quantitative Research: analytics to link sponsorship to brand awareness, sales & retention

Qualitative analysis: on-site/in market, pre/post, participant/non-participant